UK Government new fake review legislation

Online businesses operating in UK markets will have to consider how they engage with customers online – or risk multi-million pound fines, following new legislation introduced this week.

The UK Government has said that its new rules are aimed at supporting consumers and boosting competition in digital markets which, it argues, are dominated by a handful of huge tech companies.

From this week, buying, selling or hosting fake reviews will become illegal and subscription traps outlawed – meaning that firms will have to remind customers when free subscription trials end.

The UK’s new Digital Markets, Competition and Consumer Bill will also provide new powers to regulator the Competition and Markets Authority to take action where companies collude to bump up prices at the expense of UK consumers.

The changes mean that the CMA will be able to directly enforce consumer law rather than go through lengthy court processes.

The reforms will also heighten the consequences for those who breech the new rules – with the CMA and the courts now having the power to impose penalties of up to 10% of global turnover for breaching consumer law.

It does not matter in which country they are based, and firms headquartered in Europe, China or the US will also be included if they are found to be in scope.

As part of the Bill, a new unit within the CMA, the Digital Markets Unit, will also be able to tackle the root causes of competition issues in digital markets by carrying out targeted interventions.

Firms may be given instruction by the DMU, for instance, to open up their data to rival search engines, or to increase the transparency of how their app store or marketplace review systems work.

Paul Scully, Minister for Tech and the Digital Economy said the Bill would open up new paths for start-ups or smaller firms that have previously struggled to grow and compete in these markets.

“It shows that we are proudly pro-growth and pro-innovation across the board in the tech sector, seeking to open up new opportunities for all firms, however small or large they are, while empowering consumers.

The Bill was also welcomed by a wide range of organisations from  consumer groups to the hospitality industry.

Campaigning publisher Which? said that it has long fought for stronger powers for the CMA. Rocio Concha, director of policy and advocacy, said:

“The empowerment of the CMA’s Digital Markets Unit is a major step forward. It needs the right powers to loosen the vice-like grip of a handful of tech giants that will foster innovation and give consumers more choice and lower prices.”

UK Hospitality chief executive Kate Nicolls added that the sector was pleased that the government was taking action to combat fake reviews.

“Fake reviews do irreparable damage to businesses, offer consumers a misleading view of a business and devalue the efforts of honest customers leaving genuine feedback. This Bill will help to deliver fairness for both hospitality venues and their customers in this area, and we look forward to working with Government to achieve this.”